SPEXone is a compact five–angle spectropolarimeter that is being developed as a contributed payload for the NASA Plankton, Aerosol, Cloud and ocean Ecosystem (PACE) observatory, to be launched in 2022. SPEXone will provide accurate atmospheric aerosol characterization from space for climate research, as well as for light path correction in support of the main Ocean Color Instrument. SPEXone employs dual beam spectral polarization modulation, in which the state of linear polarization is encoded in a spectrum as a periodic variation of the intensity. This technique enables high polarimetric accuracies in operational environments, since it provides snapshot acquisition of both radiance and polarization without moving parts. This paper presents the polarimetric error analysis and budget for SPEXone in terms of polarimetric precision and polarimetric accuracy. We consider factors that contribute to instrumental polarization and modulation efficiency, which will be calibrated on-ground with high, but finite accuracy. The sensitivity to dynamic systematic effects in a space environment, such as degradation and ageing of components and small variations in the temperature and thermal gradients is addressed and quantified. Finally, the impact of scene dependent error sources, mainly resulting from stray light, are assessed and the total polarimetric error budget is presented. We show that SPEXone complies with the radiometric SNR requirement of 300, yielding a minimum polarimetric precision of 200 (fully polarized light) to 300 (unpolarized light) over the full spectral range for dark ocean scenes at high solar zenith angle. Assuming a stray light correction factor of 5 and considering a moderate contrast scene, the expected in-flight polarimetric accuracy of SPEXone is 1.5 · 10−3 for unpolarized scenes and 2.9 · 10−3 for highly polarized scenes, compliant with the polarimetric accuracy requirement. This performance should enable SPEXone to deliver the data quality that enables unprecedented aerosol characterization from space on the NASA PACE mission.